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Trends and Transitions: April 2010

Prescription medication bottles


Prescription Drug Costs Easier to Swallow

Until just recently, the growth of prescription drug costs appeared to be slowing down. In January 2009, a federally sponsored study calculated the annual growth of prescription drug spending at 4.6 percent, lower than any other major health care sector and the lowest level in 45 years. In a surprising reversal, however, an analysis published in November 2009 showed that medication prices were rising about 9 percent by the end of 2009.
Last year, lawmakers were once again busy addressing prescription drug laws, with 84 new measures enacted in 32 states. For the first time in a decade, however, there was little activity aimed at expanding state subsidies or discount programs for those lacking prescription drug coverage or insurance.

Eight states tightened regulations on pharmaceutical benefit managers and addressed issues of marketing drugs and privacy of prescription records. Nine states passed laws about the reuse and redistribution of unused medicines. And eight states changed their laws on Medicaid pharmaceuticals. For example, Texas barred conflicts of interests for members of their Medicaid drug review board who also have contracts with manufacturers. Utah Medicaid required more advance documentation of the medical need for drugs judged “non-preferred.” North Dakota regulated Internet pharmaceutical sales by requiring a face-to-face visit with a prescriber.

Thirty-one states reported spending less in 2007 than in 2006 on prescription drugs through Medicaid even though drug use was up. This slow-down was seen as a hopeful sign for policymakers worried about keeping health care affordable, both to patients and public and private insurers. The cause for the slow-down is well-documented and includes:

  • Use of generic drugs, which cost between 30 percent and 80 percent less than brand-name products.
  • Patents expiring on about 10 widely used medications, resulting in a flood of low-priced similar competitors.
  • Large retail chains’ high-visibility “$4 generic drug” discount programs that cut costs among lower-priced products.
  • Slower growth in prescription drug prices, averaging just 1.4 percent in 2007, compared to 3.5 percent in 2006.
  • States’ use of preferred drug lists, prior authorization, supplemental rebate programs and multi-state purchasing pools.

For 2010, pharmaceutical legislative trends may shift again, in the face of federal health debates and continued state budget pressures.

Governments Work in the Clouds

Faith of State Legislators

An NCSL analysis about the religious affiliation of state legislators from their publicly available biographies in 2008 shows about one-third of all state legislators are Protestants and, when combined with Catholics, make up half of lawmakers. Forty-three percent of legislators did not report their religion, since there is no standard requiring it.

However, 80 percent or more of state legislators in Alabama, Florida, Kentucky, Mississippi, Virginia and West Virginia listed their religion. Fewer than 40 percent did so in Arizona, California, Hawaii, Nevada, Oregon, Utah and Washington..

There were more than 10 Jewish legislators in three states: Florida, Maryland and New York. Mormon legislators were concentrated in Idaho, Utah and Wyoming. And, across the country, three legislators reported being Buddhist, three Muslim and two Hindu. 

Cloud computing is touted as a great way to save costs and improve work efficiencies in information technology. It provides access to computer resources over the Internet, so users don’t need to purchase their own servers and software, and pay only for the services they use.

A growing number of government entities are examining the benefits of cloud computing to acquire the infrastructure and software they need while making operations faster, cheaper and more sustainable. Experts predict government IT shops can save on equipment, licensing, staffing resources, office space, storage and more. And, if state and local governments combine their purchasing power to acquire computer resources via the cloud, they can achieve even greater savings.

In September 2009, the federal government launched Apps.gov, a web-based storefront for federal agencies that makes it easy for them to get cloud services such as hosted e-mail, word processing, collaboration, website creation and more. Michigan plans to build a new data center that will provide cloud computer services to state agencies, local governments and schools. It’s a particularly attractive option for IT agencies struggling to provide services after significant budget cuts, says Michigan Chief Information Officer Ken Theis. He expects “all levels of government in Michigan to benefit, by getting the most of our taxpayer dollars.”

In Utah, where data center consolidation efforts have been underway for several years, Chief Information Officer Steve Fletcher says moving to the cloud is a natural next step. Utah’s Department of Technology Services will offer software, platform and infrastructure services to state and local governments and schools through a hybrid cloud containing offerings hosted by the state and the private sector.

Colorado also plans to pursue cloud computing, but will use private sector clouds rather than creating a government cloud. John Conley, Colorado’s Statewide Internet Portal Authority director, predicts significant savings on software licenses for e-mail, instant messaging and office productivity tools. There are some concerns about the security and privacy of information stored on cloud servers that are not under the control of the government entity responsible for the data. Several leading cloud firms are working to make sure their products meet federal information security standards.

Buy Local Gains Momentum

Many state procurement laws require that in-state or regional businesses be given preferences, which often allows bids to be slightly higher than their out-of-state competitors. In-state preference laws historically applied only to construction contracts. During these tough economic times, however, states are increasing the variety of in-state preference categories to local businesses that sell motor oil and fuel, cars, office supplies, tree seeds, milk and meat products, printing, casino services and lottery equipment, and to those that provide agricultural aircraft pilots, travel services, rodeo and livestock shows and much more.

Alaska, Arkansas, California, Georgia, Iowa, Nebraska, Wisconsin and Wyoming, as well as Guam, provide one of the more recent preferences—for in-state or regional artists creating public displays of art. Unlike most other types of procurement law, in-state preference requirements for art are recommended, but not required. This is probably because of the subjective nature of art. Arkansas, for example, requires that, if “all factors are equivalent,” preference should be given to Arkansas artists.

The economic downturn may not be the only reason in-state preferences have been expanding. States have also responded to the recent trend of “going green,” and 21 states offer preferences to local manufacturers who use recycled or recovered products. Most of these states allow state agencies to choose bids from vendors who have used recycled materials if the total cost of the bid is within 5 percent of a comparable bid. Maine, Minnesota and South Dakota offer a 10 percent range when recycled materials are to be used in the winning contract proposal.